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PRESS RELEASE

Antitrust Experts Warn Against Proposed Bayer-Monsanto Merger
Legal Opinion Questions the Legality of Bayer-Monsanto Merger on Antitrust Grounds, Outlines Risks Posed by Merger
A new legal opinion, written by two former Justice Department officials from the Antitrust Division, argues that a merger between Bayer and Monsanto would violate the Clayton Act, a law enacted by Congress to curb anticompetitive business practices.
According to the white paper, a Bayer-Monsanto merger would also be in direct violation of a 2008 court order, where Monsanto was forced to divest itself of certain cottonseed and cotton breeding assets, which were sold to Bayer. If the merger proceeds, Monsanto would re-acquire these anti-competitive traits, thereby violating the US Department of Justice’s judgement.

The legal opinion points out that:
The merger would eliminate direct competition between two of the largest players in the traited seed sector, with direct consequences for seed development, herbicide markets, and innovative and open research and development.
A merger will mean the new Bayer-Monsanto conglomerate will control nearly 70% of the cotton acreage in the United State – unacceptably high by antitrust standards. It would also have unacceptable market concentration in wide swaths of commercial seed development and sales for other commonly used varieties, including traited canola, soybeans, and corn developed in North America.
The new corporation would likely lead to higher input prices, with less choice and higher food prices for consumers, and fewer non-biotechnology options available to farmers and consumers.
“A merger between Bayer and Monsanto is a five-alarm threat to our food supply and to farmers around the world,” explained Anne Isakowitsch, Senior Campaigner with SumOfUs. “This new mega corporation would be the world’s biggest seed maker and pesticide company, defying important antitrust protections, giving it unacceptable control over critical aspects of our food supply -- undermining consumer choice and the freedom and stability of farmers worldwide.”
SumOfUs, an international corporate watchdog, released the legal opinion as Bayer, a German chemical and pharmaceutical giant, increases its efforts to acquire Monsanto, one of the world’s largest producers of chemicals and farm inputs.
More than 500,000 SumOfUs members around the world have signed onto a petition opposing the potential merger of Monsanto and Bayer.
VIEW THE PETITION HERE
The legal opinion was written by Maurice E. Stucke and Allen P. Grunes, counsels at the Konkurrenz group. Maurice Stuck is a law professor at the University of Tennessee, with twenty years experience handling a range of competition policy issues in both private practice and as a prosecutor with the Antitrust Division of the U.S. Department of Justice. Allen Grunes spent more than a decade at the U.S. Department of Justice Antitrust Division, where he led many merger and civil non-merger investigations in radio, television, newspapers, motion pictures, and other industries.
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WHITE PAPER SUMMARY

Key points:

We’ve commissioned a legal analysis of the Bayer-Monsanto merger, which shows that the merger is potentially illegal, and adds significantly new anti-trust concerns to the conversation.

These experts have spent years working in the AntiTrust Division of the US Department of Justice, and they found that not only would the proposed merger violate a US Department of Justice court order and the Clayton Act anti-trust legislation, it adds unacceptable market concentration in a market already dominated by a few large players.

For example, the new company would dominate 70% of the cotton acreage in the US.

The merger eliminates direct competition between two of the largest players in the seed and farm supply sector, so it will completely eliminate incentives to innovate and provide more choice for consumers and farmers. Combined with new Intellectual Property Restrictions on seeds sitting with a handful of players, it also means that research will be more restricted, and there can be much more abuse of licensing restrictions.

We’re a global corporate watchdog, and we have pulled together over half a million people worldwide who’ve signed a petition opposing the merger, including hundreds of Bayer and Monsanto shareholders who don’t think the deal is a good idea.

Main finding:

This legal opinion raises very thorny issues regarding the legality of a Bayer-Monsanto merger - not only would the proposed merger violate a US Department of Justice court order and anti-trust legislation like the Clayton Act in the US, it will severely restrict choice and options for both farmers and consumers in a market already dominated by a few large players.

The anti-competitive consequences of this merger include:

Eliminating direct competition between two of the largest players in the farm supply and seed sector, with direct consequences for seed development, herbicide markets, and innovative research and development.

Higher input prices, with less choice and higher food prices for consumers.

Reduced non-biotechnology options available to farmers and consumers.

Increase in Monsanto’s already significant market power and dominance in herbicides and genetic traits for seed, creating a super-platform of seed traits and their complementary herbicides -- creating unacceptable market concentration for wide swaths of commercial seed development and sales, including the majority of cottonseed, canola, soybeans, and corn developed in North America.

Increased restrictions on independent research of seed traits and herbicides.

Background:

SumOfUs, a global consumer watchdog, has commissioned an objective legal opinion from leading anti-trust experts on Bayer’s recent bid to acquire Monsanto.

Bayer, the German chemical and pharmaceutical giant with operating revenues of 50 billion USD, is seeking to acquire Monsanto, one of the world’s the largest producers of chemicals and farm inputs with revenues of $15 billion USD.

Bayer’s most recent acquisition offer was rebuffed by Monsanto executives, and now rumours of a hostile take-over are circulating.

The legal opinion was written by Maurice E. Stucke and Allen P. Grunes, counsels at the Konkurrenz group. Maurice Stuck is a tenured law professor at the University of Tennessee, with twenty years experience handling a range of competition policy issues in both private practice and as a prosecutor with the Antitrust Division of the U.S. Department of Justice. Allen Grunes spent more than a decade at the U.S. Department of Justice Antitrust Division, where he led many merger and civil non-merger investigations in radio, television, newspapers, motion pictures, and other industries.

Examples:

Bayer manufactures the most viable competitor to Monsanto's glyphosate. After a merger, neither company will have an incentive to further develop Bayer's alternative Liberty Link, nor to develop alternatives to RoundUp.

The proposed Bayer-Monsanto deal would bring together the US’s two largest cotton seed sellers in a single company with almost 70 per cent of the US acreage for cotton, unacceptably high by antitrust standards.

Monsanto already possesses a 97 percent share for soybean traits, a 75 percent share for corn traits, and a 95 percent share for cotton traits, a combined Bayer-Monsanto would have a greater (and for cotton a dominant) share of the seed market, where its traits are promoted.